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Onchain Economics
Infrastructure

Smart Contract

Self-executing code deployed on a blockchain that automatically enforces agreement terms when conditions are met.

In-Depth Explanation

Smart contracts are the foundation of DeFi—they hold funds, execute trades, and enforce rules without intermediaries. Once deployed, they're immutable (unless designed to be upgradeable). Smart contract risk is the risk of bugs or exploits in this code.

Related Terms

Decentralized Finance

DeFi

Financial services built on blockchain technology that operate without traditional intermediaries.

Smart Contract Audit

A security review of smart contract code by specialists to identify vulnerabilities before deployment.

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Gas Fees

Transaction fees paid to validators/miners for executing operations on a blockchain.

Gwei

A denomination of Ether equal to one billionth of an ETH, commonly used to express gas prices.

Layer 2

L2

Scaling solutions built on top of a base blockchain (L1) that process transactions off-chain while inheriting L1 security.

Layer 1

L1

The base blockchain that provides security and consensus, such as Ethereum, Bitcoin, or Solana.

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